People from lowest income group in the country are bearing the highest Value Added Tax (VAT) burden compared to those from the highest income group, a recent study has found.
Currently, the VAT burden is 6.92% among the lowest income people and 4.56% among those under the highest income category. The average effective VAT rate is 6.01% in the country, which is also higher than that of the highest fourth income group, it has found.
The findings of the study titled “Fair Tax Monitor Bangladesh” were shared yesterday in a consultation meeting with media, development partners and civil society members at the Daily Star Building in the city.
Campaign for Good Governance (SUPRO), in collaboration with the Oxfam and the Capacity for Research and Advocacy for Fair Taxation (CRAFT) consortium conducted the study.
With the objective to identify main bottlenecks in the country’s tax system, Fair Tax Monitor Bangladesh conducted the study in line with two African countries- Senegal and Uganda, according to a press release issued by the organisers yesterday.
The study tried to provide a strong evidence-based support for advocacy work and create a framework to compare tax systems of selected countries over time.
The study found that tax collection remains below its potential. In a country of around 16 crore people, only around 12 lakh individuals and companies, which account for less than 1%, pay income tax.
With regard to tax evasion culture, the study blamed absence of a participatory policy, lack of research and reform of the tax system, short-term oriented and politically motivated tax policies, loopholes, anomalies and complexities of tax laws and policies.
